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Dart Group PLC (DTG)

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Thursday 21 November, 2013

Dart Group PLC

Half Yearly Report

RNS Number : 5782T
Dart Group PLC
21 November 2013
 



DART GROUP PLC

 

Interim Results

 

Dart Group PLC, the Leisure Airline, Package Holidays and Distribution & Logistics Group (the "Group"), announces its interim results for the half year ended 30 September 2013.  These results are presented under International Financial Reporting Standards (IFRS).

 

Financial Highlights

2013

2012

Change

Group revenue

£787.1m

£584.5m

+35%

Group operating profit

£81.2m

£58.5m

+39%

Overall operating margin

10.3%

10.0%

+0.3%

Profit before tax

£78.1m

£57.0m

+37%

Basic earnings per share

41.51p

30.11p

+38%

Half year dividend

0.60p

0.54p

+11%





·        Group revenue increased 35% to £787.1m (2012: £584.5m) whilst profit before tax increased 37% to £78.1m (2012: £57.0m) underpinned by continued strong growth in both the Leisure Airline and Package Holiday businesses.

 

·        Leisure Airline revenue growth of 19% to £463.2m (2012: £388.0m) reflects a 13% increase in passengers flown and increases in ticket yields and non-ticket retail revenues.

 

·        Package Holidays achieved 110% growth in revenues to £380.1m (2012: £180.6m), with customer numbers increasing by 103% to 634,866.

 

·        Distribution & Logistics contributed £78.2m of revenues (2012: £80.3m).

 

·        With our Leisure Travel operations becoming increasingly seasonal as we continue to grow the business, winter losses are expected to increase materially.  Accordingly, with the important winter booking period still to come, the Board remains cautiously optimistic in relation to full year profit growth.

 

Chairman's Statement

I am pleased to report on the Group's performance for the six months ended 30 September 2013 in our three businesses, Jet2.com, the North's leading leisure airline, Jet2holidays, the ATOL protected package holidays operator and Fowler Welch, one of the UK's leading logistics providers.  Group profit before tax increased 37% to £78.1m (2012: £57.0m) whilst overall Group turnover increased by 35% to £787.1m (2012: £584.5m).  The increase in profitability reflects a satisfactory summer for Jet2.com, underpinned by the continued successful growth of the Jet2holidays business.  Our leisure travel operations continue to concentrate on the Mediterranean, the Canary Islands and European Leisure Cities, which means that the business is becoming increasingly seasonal as it continues to grow and, as a result, increased losses are to be expected in the second half of the year.

The Group generated an increased net cash flow from operating activities of £89.5m (2012: £81.0m), reflecting further trading performance improvements and business growth in both Jet2.comand Jet2holidays, together with increased Jet2holidays forward bookings.  Total capital expenditure amounted to £42.7m (2012: £26.1m) as two aircraft were acquired in the period together with spend incurred on group infrastructure and the enhancement and long term maintenance of the Group's aircraft fleet.

Cash and money market deposits increased by £48.9m in the period (2012: £54.8m), resulting in a balance of £269.8m (2012: £206.8m) at the end of the half year, which included advance payments from Jet2.comand Jet2holidayscustomers of circa £134m (2012: £98m).

Basic earnings per share increased to 41.51p from 30.11p.  In view of the outlook for the full year the Board has decided to pay an increased interim dividend of 0.60p per share (2012: 0.54p). The dividend will be paid on 3 February 2014 to shareholders on the register at 3 January 2014.

Leisure Airline

Our Leisure Airline, Jet2.com, increased its flown passengers by 13.1% to 4.1m in the period (2012: 3.6m) and revenues by 19.4% to £463.2m. This growth was driven by an increase in Jet2holidays passenger numbers which represented 31% of all passengers flown (2012: 17%). The average load factor increased from 91.6% to 92.5% as passenger growth outstripped the seat capacity growth of 12%. Despite challenging market conditions, ticket yields (excluding government taxes) increased by 9.2%, as more emphasis was placed on higher yielding Mediterranean and Canary Island destinations.  Retail revenue (non-ticket revenue) per passenger increased by 7.8% due to a continued focus on pre-departure, in-flight and ancillary product sales.  As a result, Jet2.com's operating profit margin ended the half ahead of last year.  

During summer 2013 the company operated 53 aircraft (2012: 44) focusing on core high volume leisure destinations from its eight Northern UK bases - Belfast International, Blackpool, East Midlands, Edinburgh, Glasgow, Leeds Bradford, Manchester and Newcastle airports. 

For winter 2013/14, Jet2.com has increased its scheduled capacity by 23%, reducing Charter activity in the process, with growth provided by additional scheduled flights to Mediterranean and Canary Island destinations.

Capacity for summer 2014 is to grow by a further 14% (summer 2013: 12%) with additional services from each of our bases, which will increase frequency and support the growth of both Jet2.com and Jet2holidays. In total we have added 26 new services, including three new destinations - Fuerteventura, Verona and Vienna for next year.

Package Holidays

Our ATOL protected tour operator, Jet2holidays, grew its customer numbers by 103%, as 634,866 customers enjoyed our package holidays in the period. As a result, revenue increased by 110% to £380.1m (2012: £180.6m). This growth continues to be fuelled by further improvements to the Jet2holidays product range and a fully integrated approach with Jet2.com, underpinned by a relentless focus on providing a great value offering to our Northern based customers.  

Our customers continue to demand great value but are not willing to reduce quality. Therefore, our holidays are ideally suited to the current difficult economic environment as we offer packages encompassing flights, transfers and accommodation ranging from budget self catering, to five star luxury hotels, with all inclusive and three and four star packages being particularly popular.  

For summer 2014 we are continuing to build product and brand awareness in our core markets. These actions, together with the development of our overall product range and focused growth in airline capacity to our popular leisure destinations, will support the continuing growth of Jet2holidays.

Distribution & Logistics

Fowler Welch is one of the UK's leading logistics providers to the food industry supply chain, serving retailers, growers, importers and manufacturers across its network of eleven sites. A full range of added value services is provided including storage, case level picking and an award-winning national distribution network.

Overall revenues decreased by 2.6%, primarily as a result of contract losses towards the end of last financial year, which has led to the decision to close our European operating base in Holland. The business was also adversely affected by the unexpectedly varied profile of seasonal volumes required by our supermarket customers during late July, August and September, which required extra resource to uphold service levels.  This, together with investments made in people and infrastructure to support future sustainable profit growth, meant that operating profits reduced as compared to the first half of 2012/13.

Growth opportunities remain positive with Heywood, our ambient shared user storage and distribution site in Greater Manchester, revenues up 3% and additional contracts secured for implementation toward the end of the current financial year. The key produce distribution sites of Spalding, Kent and Hilsea have buoyant pipelines. New contracted volume has been secured for Spalding commencing early next financial year whilst a broader set of services tailored to the produce sector are planned to commence in the next six months in Kent. The additional warehouse space secured at Hilsea at the end of the last financial year will see a new storage and picking contract implemented in the second half.

Though the marketplace remains extremely competitive and price-focused, the outlook for Fowler Welch remains encouraging through its well positioned national network of sites, the focus on its core activities of added value services and its growing reputation in the ambient arena.

Outlook

Whilst the Group's trading performance during the first six months of the year has been satisfactory, our leisure travel operations are becoming increasingly seasonal as we continue to grow the business and winter losses are expected to increase materially.  Accordingly, with the important winter booking period still to come, the Board remains cautiously optimistic in relation to profit growth for the financial year ending 31 March 2014.

 

Philip Meeson

Chairman

21 November 2013

 

For further information please contact:

Dart Group PLC

Philip Meeson, Group Chairman and Chief Executive

Tel:              0113 239 7817

Mob:          07785 258666

Gary Brown, Group Chief Financial Officer


 

Mob:          07739 208969

Smith & Williamson Corporate Finance Limited

Nominated Adviser

Andy Pedrette / Siobhan Sergeant


 

Tel:              020 7131 4000

Canaccord Genuity - Joint Broker

Peter Stewart / Mark Whitmore

Tel:              020 7523 8000


 

Arden Partners - Joint Broker

Christopher Hardie


 

Tel:              020 7614 5900

Buchanan - Financial PR

Richard Oldworth

Tel:              020 7466 5000

 

 

Dart Group PLC

 

Consolidated Group Income Statement (unaudited)

For the half year ended 30 September 2013

 



 

 

Half year ended 30 September 2013

Unaudited


 

 

Half year ended

30 September 2012

Unaudited


 

 

Year ended

31 March

2013

Audited

Continuing operations

Note

£m


£m


£m







Turnover

4

787.1


584.5


869.2








Net operating expenses


(705.9)


(526.0)


(831.3)








Operating profit


81.2


58.5

 

 

37.9

Finance income


0.8


1.0


3.6

Finance costs


(3.9)


(2.5)


(1.0)

Net financing costs


(3.1)


(1.5)


2.6















Profit  before taxation


78.1


57.0


40.5








Taxation

7

(17.9)


(13.9)


(9.3)








Profit for the period (all attributable to equity shareholders of the parent company)


60.2


43.1


31.2













Earnings per share

5






 - basic


41.51p


30.11p


21.73p

 - diluted


40.75p


29.12p


21.44p








 

 

Dart Group PLC

 

Consolidated Group Statement of Comprehensive Income (unaudited)

For the half year ended 30 September 2013

 

 


Half year ended

30 September

2013

Unaudited

£m


Half year ended

30 September 2012

Unaudited

£m


Year ended

31 March

2013

Audited

£m








Profit for the period attributable to equity holders of the parent company


 

60.2


 

43.1


 

31.2








Effective portion of changes in fair value movements in cash flow hedges


(14.4)


(17.3)


(3.3)

Net change in fair value of effective cash flow hedges transferred to profit


(24.7)


-


-

Taxation on components of other comprehensive income


9.0


4.1


0.6








Other comprehensive income & expense for the period, net of taxation


(30.1)


(13.2)


(2.7)








Total comprehensive income for the period attributable to equity holders of the parent company


30.1


29.9


28.5








 

 

 

Dart Group PLC

 

Consolidated Group Balance Sheet (unaudited)

As at 30 September 2013

 


30 September 2013

Unaudited

£m


30 September 2012

Unaudited

£m


31 March

2013

Audited

£m

Non-current assets







Goodwill


6.8


6.8


6.8

Property, plant and equipment


276.9


236.7


269.1

Derivative financial instruments


1.5


0.4


1.0



285.2


243.9


276.9








Current assets







Inventories


2.2


1.1


1.3

Trade and other receivables


140.7


105.6


226.2

Derivative financial instruments


2.6


6.2


22.2

Money market deposits


19.0


6.0


30.0

Cash and cash equivalents


250.8


200.8


190.9



415.3


319.7


470.6

 







Total assets


700.5


563.6


747.5

 







Current liabilities







Trade and other payables


183.1


159.1


92.0

Deferred revenue


224.7


159.8


407.1

Borrowings


0.8


0.8


0.8

Provisions


2.4


3.0


2.1

Derivative financial instruments


22.1


5.3


4.2



433.1


328.0


506.2








Non-current liabilities







Other non-current liabilities


8.9


11.5


11.4

Borrowings


9.4


8.1


7.7

Derivative financial instruments


8.2


1.1


0.3

Deferred tax liabilities


23.5


25.6


35.3

 


50.0


46.3


54.7

 







Total liabilities


483.1


374.3


560.9

 







Net assets


217.4


189.3


186.6

 














Shareholders' equity














Share capital


1.8


1.8

1.8

Share premium


11.2


10.1

10.7

Cash flow hedging reserve


(17.7)


1.9

12.4

Retained earnings


222.1


175.5


161.7

Total shareholders' equity


217.4


189.3


186.6

 

 

 

Dart Group PLC

 

Consolidated Group Cash Flow Statement (unaudited)

For the half year ended 30 September 2013



Half year ended 30 September 2013

Unaudited

£m


Half year ended 30 September 2012

Unaudited

£m


Year ended     31 March

2013

Audited

£m

Cash flows from operating activities







Profit on ordinary activities before taxation

78.1


57.0


40.5

Adjustments for:







Finance income


(0.8)


(1.0)


(3.6)

Finance costs


3.9


2.5


1.0

Depreciation


34.9


24.1


45.5

Equity settled share based payments


0.2


0.2


0.4








Operating cash flows before movements in working capital


116.3


82.8


83.8








(Increase) / decrease in inventories


(0.9)


0.3


0.1

Decrease / (increase) in trade and other receivables

85.1


11.8


(108.5)

Increase in trade and other payables

73.5


82.4


29.2

(Decrease) / increase in deferred revenue

(182.4)


(97.0)


150.3

Increase in provisions

0.4


1.3


0.4








Cash generated from operations


92.0


81.6


155.3








Interest received


0.7


1.0


1.4

Interest paid


(0.6)


(0.5)


(1.1)

Income taxes paid


(2.6)


(1.1)


(5.3)








Net cash from operating activities

89.5


81.0


150.3








Cash flows from investing activities







Purchase of property, plant and equipment

(42.7)


(26.1)


(79.7)

Net decrease in money market deposits


11.0


71.0


47.0








Net cash (used in) / from investing activities


(31.7)


44.9


(32.7)

 







Cash flows from financing activities







Repayment of borrowings

(8.3)


(0.4)


(0.8)

New loans advanced


10.0


-


-

Proceeds on issue of shares


0.5


0.3


0.9

Equity dividends paid


-


-


(2.1)








Net cash from / (used in) financing activities

2.2


(0.1)


(2.0)








Effect of foreign exchange rate changes


(0.1)


-


0.3








 







Net increase in cash in the period

59.9


125.8


115.9

 

Cash and cash equivalents at beginning of period

190.9


75.0


75.0

 







Cash and cash equivalents at end of period


250.8


200.8


190.9

 

Dart Group PLC

 

Consolidated Group Statement of Changes in Equity (unaudited)

For the half year ended 30 September 2013

                                                                                                                       


Share

capital


Share premium


Cash flow hedging reserve


Retained earnings


Total reserves


£m


£m


£m


£m


£m











Balance at 1 April 2012

1.8


9.8


15.1


132.2


158.9











Total comprehensive income for the period

-


-


(13.2)


43.1


29.9

Share based payments

-


-


-


0.2


0.2

Issue of share capital

-


0.3


-


-


0.3











Balance at 30 September 2012

1.8


10.1


1.9


175.5


189.3











Total comprehensive income for the period

-


-


10.5


(11.9)


(1.4)

Dividends paid in the period

-


-


-


(2.1)


(2.1)

Share based payments

-


-


-


0.2


0.2

Issue of share capital

-


0.6


-


-


0.6











Balance at 31 March 2013

1.8


10.7


12.4


161.7


186.6











Total comprehensive income for the period

-


-


(30.1)


60.2


30.1

Share based payments

-


-


-


0.2


0.2

Issue of share capital

-


0.5


-


-


0.5











Balance at 30 September 2013

1.8


11.2


(17.7)


222.1


217.4

 

Dart Group PLC

 

Notes to the consolidated financial statements

For the half year ended 30 September 2013 (unaudited)

 

1.             General information

The accounts for Dart Group PLC (the "Group") have been prepared and approved by the Directors in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("Adopted IFRS").  The Group's accounts consolidate the accounts of Dart Group PLC and its subsidiaries.

This interim financial report does not fully comply with IAS 34 "Interim Financial Reporting", which is not currently required to be applied by AIM companies.

The interim report for the six months ended 30 September 2013 was approved by the Board of Directors on 14 November 2013. 

2.             Accounting policies

Basis of preparation of the interim report

The unaudited consolidated interim financial report for the six months ended 30 September 2013 does not constitute statutory accounts as defined in s435 of the Companies Act 2006.  The accounts for the year ended 31 March 2013 were prepared under IFRS and have been delivered to the Register of Companies.  The report of the auditor on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under s495(2) nor (3) of the Companies Act 2006.  In this report, the comparative figures for the year ended 31 March 2013 have been audited.  The comparative figures for the period ended 30 September 2012 are unaudited.

The financial statements have been prepared under the historical cost convention except for all derivative financial instruments that have been measured at fair value.

The Group uses forward foreign currency contracts, currency option products and aviation fuel swaps to hedge exposure to foreign exchange rates and aviation fuel price volatility.  The Group also uses forward EU Allowance contracts and forward Certified Emissions Reduction contracts to hedge exposure to Carbon Emissions Allowance volatility.  Such derivative financial instruments are stated at fair value.

Ineffectiveness in qualifying cash flow hedges under IAS 39 can arise as a result of the difference between the contractual profile of a hedge and the profile of transactions defined as the hedged item.  IAS 39 requires ineffectiveness in qualifying cash flow hedges to be recorded in the income statement.

The Group's accounts are presented in pounds sterling and all values are rounded to the nearest £100,000 except where indicated otherwise.

Going concern

The Directors have prepared financial forecasts for the Group, comprising operating profit, balance sheet and cash flows through to 31 March 2016.

For the purposes of their assessment of the appropriateness of the preparation of the Group's unaudited interim accounts on a going concern basis, the Directors have considered the current cash position, the availability of bank facilities, the net current liability position - principally a result of continued investment in our fleet - and forecasts of future trading. 

The Directors have assessed the current level of forward bookings for the Leisure Airline and Package Holidays businesses, Distribution & Logistics contracts and agreements, the underlying assumptions and principal areas of uncertainty within future forecasts, in particular those related to market and customer risks which impact on future bookings, cost management, working capital management and treasury risks.  A number of these assumptions are subject to market uncertainty and impact financial covenants.  Recognising this potential uncertainty, the Directors have considered a range of actions available to mitigate the impact of these potential risks should they crystallise and have also reviewed the key strategies which underpin the forecast and the Group's ability to implement them successfully.

On the basis of the current liquidity position, the current Leisure Airline and Package Holidays forward booking profile, Distribution & Logistics contracts and agreements, the forecasts and these considerations, the Directors have assessed future covenant compliance and headroom for the foreseeable future and concluded that it is appropriate for the unaudited financial statements for the period ended 30 September 2013 to be prepared on a going concern basis.

3.             Adoption of new and revised standards

The following new or revised IFRS standards and IFRIC interpretations will be adopted for purposes of the preparation of future financial statements, where applicable.  We do not anticipate that the adoption of these new or revised standards and interpretations will have a material impact on our financial position or results from operations. 

International Financial

Reporting Standards

Applies to periods

beginning after

IFRS 9   Financial Instruments

January 2015

4.             Segmental information

Business Segments

 

The Group's businesses are organised into three operating segments:

·     Leisure Airline, comprising the Group's scheduled leisure airline, Jet2.com;

·     Package Holidays, comprising the Group's ATOL protected tour operator, Jet2holidays; and

·     Distribution & Logistics, comprising the Group's logistics company, Fowler Welch.

These divisions are the basis on which the Group reports its primary segmental information in the day-to-day management of the business.  Following the identification of the operating segments the Group has assessed the similarity of their characteristics.  Given the differences between them, it is not deemed appropriate to aggregate them for reporting purposes and therefore all of the identified operating segments are disclosed as reportable segments.  The following is an analysis of the Group's revenue by operating segment. 

Group eliminations include the removal of seat sales by Leisure Airline to the Package Holidays business. Revenue from reportable segments is measured on a basis consistent with the income statement and is principally generated from within the UK, the Group's country of domicile.

 

Segmental turnover

Half year to

30 September 2013

Unaudited

 

£m


Half year to

30 September 2012

Unaudited

 

£m


Year to

31 March 2013

Audited   

 

£m







Leisure Airline

463.2


388.0


556.2

Package Holidays

380.1


180.6


244.8

Distribution & Logistics

78.2


80.3


155.2

Group eliminations

(134.4)


(64.4)


(87.0)

Total turnover

787.1


584.5


869.2

 

 

5.             Earnings per share

The calculation of earnings per share is based on the following:


Half year to

30 September

2013

Unaudited


Half year to

30 September

2012

Unaudited


Year to

31 March

2013     Audited







Profit for the period (£m)

60.2


43.1


31.2







Weighted average number of ordinary shares in issue during the period used to calculate basic earnings per share

145,021,355


143,112,650


143,618,691







Weighted average number of ordinary shares in issue during the period used to calculate diluted earnings per share

147,727,104


147,947,206


145,545,022

 

6.             Dividends

An interim dividend has been proposed during the six month period to 30 September 2013 of 0.60p per share (2012: 0.54p).  The dividend will be paid, out of the Company's available distributable reserves, on 3 February 2014 to shareholders on the register at 3 January 2014.  In accordance with IAS 1, dividends are recorded only when paid and are shown as a movement in equity rather than as a charge in the Income Statement.

7.             Taxation

The tax charge for the period of £17.9m (2012: £13.9m) is calculated by applying an estimated effective tax rate of 23% to the profit for the period (2012: 24%).  The Government has indicated that it intends to enact future reductions in the main tax rate, including a reduction to 21% by 1 April 2014.  As a result, the Group's reported deferred tax liability of £23.5m (2012: £25.6m) would ultimately reduce by £2.0m to £21.5m.

 

8.             Reconciliation of net cash flow to movement in net cash

 


Half year to

30 September

2013

Unaudited

 

£m


Half year to

30 September

2012

Unaudited

 

£m


Year to

31 March

2013

Audited

 

£m







Increase in cash in the period

59.9


125.8


115.9

(Increase) / decrease in net debt in the period

(1.7)


0.4


0.8

 

Change in net cash resulting from cash flows in the period

 

58.2


 

126.2


 

116.7

Net cash at beginning of period

182.4


65.7


65.7







Net cash at end of period

240.6


191.9


182.4

 

9.             Contingent liabilities

The Group has issued various guarantees in the ordinary course of business, none of which are expected to lead to a financial gain or loss.

 

10.          Other matters

This report will be posted on the Group's website, www.dartgroup.co.uk and copies are available from the Company Secretary at the registered office of the Company, Low Fare Finder House, Leeds Bradford International Airport, Leeds, LS19 7TU.


This information is provided by RNS
The company news service from the London Stock Exchange
 
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